A middleman in an ambiguous situation-Experimental evidence

Kazuhito Ogawa; Yuhsuke Koyama; Sobei H. Oda

doi:10.1016/j.socec.2005.11.032

A middleman in an ambiguous situation-Experimental evidence

Kazuhito Ogawa, Yuhsuke Koyama, Sobei H. Oda

Research output: Contribution to journal › Article › peer-review

Abstract

This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.

Original language	English
Pages (from-to)	412-439
Number of pages	28
Journal	Journal of Socio-Economics
Volume	35
Issue number	3
DOIs	https://doi.org/10.1016/j.socec.2005.11.032
Publication status	Published - 2006 Jun
Externally published	Yes

Keywords

Experimental economics
Market microstructure
Middleman
Two-stage search

ASJC Scopus subject areas

Economics and Econometrics

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title = "A middleman in an ambiguous situation-Experimental evidence",

abstract = "This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.",

keywords = "Experimental economics, Market microstructure, Middleman, Two-stage search",

author = "Kazuhito Ogawa and Yuhsuke Koyama and Oda, {Sobei H.}",

note = "Funding Information: This research was supported by the Open Research Centre “Experimental Economics: A new method of teaching economics and the research on its impact on society, ” the Graduate School of Economics, Kyoto Sangyo University and the Japan Society for the Promotion of Science, Grant-in-Aid for Scientific Research (B), 13480115. This research was partially supported by the Ministry of Education, Science, Sports and Culture, Grant-in-Aid for JSPS Fellows, 2002–2005. We thank Atsushi Iwasaki, Kouhei Iyori, Nariaki Nishino and Syuichi Imura for helpful comments and illuminating discussion.",

year = "2006",

month = jun,

doi = "10.1016/j.socec.2005.11.032",

language = "English",

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AU - Koyama, Yuhsuke

AU - Oda, Sobei H.

N1 - Funding Information: This research was supported by the Open Research Centre “Experimental Economics: A new method of teaching economics and the research on its impact on society, ” the Graduate School of Economics, Kyoto Sangyo University and the Japan Society for the Promotion of Science, Grant-in-Aid for Scientific Research (B), 13480115. This research was partially supported by the Ministry of Education, Science, Sports and Culture, Grant-in-Aid for JSPS Fellows, 2002–2005. We thank Atsushi Iwasaki, Kouhei Iyori, Nariaki Nishino and Syuichi Imura for helpful comments and illuminating discussion.

PY - 2006/6

Y1 - 2006/6

N2 - This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.

AB - This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.

KW - Experimental economics

KW - Market microstructure

KW - Middleman

KW - Two-stage search

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SN - 2214-8043

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A middleman in an ambiguous situation-Experimental evidence

Abstract

Keywords

ASJC Scopus subject areas

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